Which of the following is NOT an example of off-balance sheet activities?

Off-balance sheet activities refer to transactions or financial arrangements that do not appear on a company’s balance sheet but can still affect its financial position and performance. The correct answer highlights capital gains from investments as an exception to these activities.

Capital gains arise when an investment is sold for more than its purchase price and are reported in the income statement, reflecting on the company's earnings. Unlike off-balance sheet activities, these gains relate directly to assets that are on the balance sheet, thus they contribute to the financial statements.

In contrast, loan commitments, standby letters of credit, and forward contracts on currencies are all considered off-balance sheet activities because they do not require immediate recognition on the balance sheet despite their potential future impacts. For instance, loan commitments indicate a bank’s obligation to lend funds in the future but aren’t recorded as liabilities until the actual loan is drawn. Standby letters of credit provide guarantees for payments but do not appear on the balance sheet until they are invoked. Similarly, forward contracts involve agreements to exchange currencies at a specified rate in the future but are not recorded on the balance sheet until settled.

Understanding the distinction between on-balance sheet and off-balance sheet items is crucial for analyzing a company's financial health and risk exposure.